Challenges for Japan’s Energy Transition

- Basic Hydrogen Strategy -

June 24

Masana Ezawa

Director, Hydrogen and Fuel Cell Strategy Office,

Ministry of Economy, Trade and Industry (METI), Japan

Crude oil (2016) Natural gas (2016)

Ref.: Trade statistics

Strait of Hormuz

Steam Coal (2016)

Saudi Arabia, 35.7%

UAE, 24.5%

Qatar, 9.2%

Kuwait, 6.8%

Iran, 6.7%

Russia, 6.1%

Mexico, 2.7%Iraq, 2.3%

Indonesia, 1.6%Malaysia, 0.6%

Others, 3.8%

Middle-East dependence 86.4%

Total import: 3.35 million BD/year

Australia, 75.6%

Indonesia, 10.8%

Russia, 9.8%Canada, 1.8%

China, 1.1%USA, 0.7% Others, 0.1%

Middle-East dependence 0%

Total import: 109.8million

t/year

Australia,25%

Malaysia,16%

Qatar,15%

Russia,8%

UAE7%

Indonesia7%

Brunei,4%

Papua New Guinea,

4%USA4%

Oman,3%

Nigeria,2%

Others,5%

Middle-East dependence

23.6%Total import: 94.24million

t/year

1

Fossil Fuel Exporting Countries to Japan

Japan’s Responsibility for Energy Transition

⇔ Energy trilemma

Energy security

Environment (Sustainability)

Economic affordability (Cost)

Measures;

Energy saving

Renewable energy

Nuclear energy

CCS + Fossil fuels

Hydrogen

2

Mission/ Background

3”E” + Safety

Oil(40%)

Coal(27%)

Gas(27%)

Hydro

Nuclear

Renewables

Imported Fossil Fuel <90%

Japan’s Primary Energy (FY2016)

3

Why Hydrogen?

Contribute de-carbonization (Environment)

Mitigate dependence on specific countries (Energy security)

Enable to utilize low cost feedstock (Economic affordability)

+ Japan’s edge in technology since 1970s

Contribution to 3”E”

Roles of H2 in Electrified Mobility/ Generation Mix

Source: “Hydrogen Scaling Up”, Hydrogen Council (2017) Source: “How Hydrogen Empowers the Energy Transition”, Hydrogen Council (2017)

Powertrain Costs Analysis for FCEVs & BEVs Power Supply & Demand Simulation for Germany in 2050

Pow

er

supply

& d

em

and,

GW

Direction of Activities to Realize a “Hydrogen Society”

Domestic fossil fuels

Production

Overseas unused energy

Renewable energy

Transportation and supply（supply chain） Use

City gas pipeline/LPG supply network

Hydrogen station

Solar power

Wind power

Overseasrenewable energy

City gasLP gas

Brown coal

CCS

Future

• Demonstration of the world’s first international hydrogen supply chain in 2020

*Use hydrogen as a means of energy storage (absorb fluctuations in intermittent RES)

Hydrogen pipeline

Use in the industrial sector（Power-to-X）

Oth

er

Large-scale hydrogen oceanTransportation network

4

Fuel cell vehicles（FCV, FC bus, etc.）

Tra

nsporta

tion• Entered service

in Tokyo in March 2017

• 100 buses by 2020

• 3,000 vehicles installed• 40,000 vehicles by 2020

Fuel cell cogeneration（e.g. Ene-Farm）

Pow

er

genera

tionHydrogen power generation

（CO2-free thermal power plants）

Future

• Combined heat and power supply using hydrogen cogeneration in Kobe in early 2018

• For Business and Industry use, some models have already been launched in 2017

Reforming

Reforming

Byproducthydrogen

Gasification

Byproducthydrogen

Waterelectrolysis

Waterelectrolysis

Liquefied hydrogen lorry

• Demonstration of large-scale power-to-gas @Fukushima/aiming for use in the 2020 Tokyo Olympic and Paralympic Games

• Installation of 113 stations nationwide

• Promotion of regulatory reform for cost reduction

• Over 280,000 units installed

5

Strategy

“Basic Hydrogen Strategy” (Prime Minister Abe’s Initiative)

World’s first national strategy

2050 Vision: position H2 as a new energy option (following Renewables)

Target: make H2 affordable($3/kg by 2030 ⇒ $2/kg by 2050)

【Supply】

【Demand】・・・

3 conditions for realizing affordable hydrogen

① Inexpensive feedstock (unused resources, renewables)

② Large scale H2 supply chains

③ Mass usage (Mobility ⇒ Power Generation ⇒ Industry)

Key Technologies to be Developed

• Electrolysis System• Gasification + CCS

• Energy Carrier(LH2, MCH, NH3, etc.)

• Fuel Cells (Mobility, Generation)• H2-fired Generation

Production UseTransportation

6

Scenario

Current 2030 20502020 2025

Cost ($/kg) ～10 3 2

Volume (t/y) 200 300k 5～10m4k

HRS

FCV

FC Bus

FC FL

Large Power Plant 1GW 15～30GW

(900)320160

40k

100

2.9k 200k 800k

1005 1.2k

500140 10k

(RD&D)

ReplaceFilling Stations

ReplaceConventionalMobility

Dem

and Mobility

Gene-

ratio

n FC CHP* 1.4m 5.3m274k

Supply

InternationalH2 Supply Chains

Industry Use Expand H2 Use(RD&D)

Domestic H2

Domestic Power-to-gasCO2-free H2

*Primary energy: natural gas.

ReplaceOld Systems

(RD&D)

Summary of the Strategic Road Map for Hydrogen and Fuel Cells

Set of new target to achieve (Spec for basic technologies and cost breakdown goals)

Price difference between FCV and HV: ￥3m → \0.7m

Main FCV System cost, FC : \20,000/kW → \5,000/kW,

Storage : \0.7m → \0.3m

HRS Construction cost:

HRS Operating cost:

HRS components cost

Production cost from brown coal gasification:

Electrolyzer Cost:

several hundreds JPY/Nm3→ \12/Nm3

\200,000m/kW→\50,000/kW

\34m/year → \15m/year

\350m → \200m

Compressor: \90m → \50mAccumulator: \50m → \10m

The Strategic Road Map for Hydrogen and Fuel Cells～ Industry-academia-government action plan to realize Hydrogen Society ～（overall）U

se

Mobility

Pow

er

Set of targets to achieve Approach to achieving target

FC

Supply

In order to achieve goals set in the Basic Hydrogen Strategy,

① Set of new targets to achieve (Specs for basic technologies and cost breakdown goals), establish approach to achieving target

② Establish expert committee to evaluate and conduct follow-up for each field.

Cost of main FCV system

Costs of components for HRS

Vehicle cost of FC bus

• Regulatory reform and

developing technology

Efficiency of hydrogen power generation

(\3m → \0.7m )

（26％→27％） • Developing of high efficiency combustor etc.

Construction cost \350m →

\200m

Operating cost \34m → \15m

Realization of grid parity in commercial and industrial use

FCV

• Developing FC cell/stack technology

（thousands ㎥→50,000㎥）

Cost of electrolyzer

（5kWh/Nm3→4.3kWh/Nm3）

Construction and operating costs

HRS

Bus

2025 Price difference between FCV and HV

FC \20k/kW → \5k/kWHydrogen Storage \0.7m → \0.3m

2025

2020

2025

(\105m → \52.5m)

• Consideration for creating nation wide network of HRS

• Extending hours of operation

• Increasing HRS for FC bus

\50,000/kWin future

2030

Compressor \90m → \50mAccumulator\50m → \10m

（13.6kWh/kg→6kWh/kg）

（\200,000m/kW→\50,000/kW）

Efficiency of water electrolysis

※In addition, promote development of guidelines and technology development for expansion of hydrogen use in the field of FC trucks, ships and trains.

※1MW scale

Hydrogen Cost

System cost of water electrolysis

Early 2020s

Production: Production cost from brown coal gasification

Storage/Transport : Scale-up of Liquefied hydrogen tank

Higher efficiency of Liquefaction

（\several hundred/Nm3→ \12/Nm3 ）

• Scaling-up and improving efficiency of brown coal gasifier

• Scaling-up and improving thermal insulation properties

• Demonstration in model regions for social deployment utilizing the achievement in the demonstration of Namie, Fukushima

• Development of electrolyzer with higher efficiency and durability

Early realization of grid parity

+CCS

Gre

en H

2

\30/Nm3 by 2030\20/Nm3 in future

Commercializeby 2030

Early 2020s

Goals in the Basic Hydrogen Strategy

1,200 by 2030

320 by 2025900 by 2030

200kb y2025800k by 2030

Fossil

Fuel

9

Hydrogen Cost Targets

In order to achieve grid parity, Hydrogen cost is needed to be lower than price of natural gas.

Target of hydrogen importing cost in Japan has to be ￥13/Nm3 in future (US$1.3/kg, equivalent to US$10/MMBtu).

from World Energy Outlook 2018 (IEA)

10

Hydrogen Cost Perspective of the Supply Chain Project

Target cost of hydrogen supply in 2030 is ￥30/Nm3.

Natural gas price is unpredictable, however further cost reduction is needed.

2,3

2,1

4,2

5,5

0,5

9,4

0

5

10

15

20

25

30

Hyd

roge

n C

ost

[￥

/N

m3]

Hydrogen cargo ships

Freight base

Hydrogen liquefaction

Hydrogen pipeline

Hydrogen production

Hydrogen purification(CO2 caputure)

CO2 storage

Brown coal fuel

￥29.7/Nm3

￥13/Nm3

2030 Future target cost

≒US$1.3/kg

Environmental Value

11

Ongoing Projects (Supply-side)

International H2 Supply Chain Power-to-gas

Fukushima Renewable H2 Project

2020～

Power-to-Gas Plant*

ElectrolysisSystem(Alkaline)Liquefied

H2 Carrier*

Gasification

Brown Coal+CCS

LoadingFacility*

Japan-Australia Pilot Project

2020～

Japan-Brunai Pilot Project

Off-gas

Steam Methane

Reforming

Dehydro-genation*

(MCH→TOL)

Hydro-genation*

(TOL→MCH)

ChemicalTanker

2020～

* Image

FukushimaTokyo

12

Olympic and Paralympic games Tokyo in 2020

The first Olympic and Paralympic games with Olympic torch and flame lighted by hydrogen

Can be colored in various colors！

Olympic torch and flame

Transportation

Li Na K Ca Sr Ba Cu

13

Demand & Supply Balance in Kyushu Area (May 4th, 2016）

• Dispatch ability of thermal power plant is essential.

PV

DemandCurve

Pumped Storage Power Generation

O`clock O`clock O`clock O`clock O`clock

Stop or restrain the operation of thermal power, and pump up water during day time

38% (the ratio of Renewables per day)

Increase of output of thermal power and pumped storage power, responding to the rapid electricity demand increase (around 2Gw/hour), caused by PV output decrease.

Thermal Power as a baseload

Decrease of output of thermal power, responding to electricity decrease caused by PV output increase.

4.9 million (kW) (around 66% of the total demand) out put of PV and Wind during day time(at 13:00) Pumped Storage Power Generation

Pumpingupwater

14

Ongoing Projects (Demand-side)

H2 Power Generation

Burning Simulation(H2 + CH4)

2018～

R&D of H2 Burner Systems

H2 Mobility

FC Bus

FC Truck Demo

2013～

× 100 in 2020

Joint Venture for H2 Infrastructure Development

H2 ApplicationsH2 Station Network

2016～

2018～

H2 Co-generation Demonstration Project

Hydrogen GasTurbine (1MW class)

For PowerGeneration

<500MW

*134 Stationsby May 2019

15

G20 Ministerial Meeting on Energy Transitions and Global Environment for Sustainable Growth

Date: 15th, 16th June 2019 Venue: Karuizawa, Japan

Outcomes :

Communique

Action Plan

Hydrogen

The importance of hydrogen was referred in the Communique and Action Plan for the first time in G20.

Hydrogen Report was released at G20 by IEA

One of the main themes of G20 Exhibition in Karuizawawas Hydrogen.

Over FCVs are used for transportation of Ministers in the venue

Presentation and input about hydrogen by Hydrogen Council

Japan, EU and US announced the Joint Statement of future cooperation on hydrogen and fuel cell technologies at the margin of G20.

Hydrogen Energy Ministerial Meeting

• Date / Place： October 23rd, 2018 / Dai-ichi Hotel Tokyo

• Organized by：METI , New Energy and Industrial Technology Development Organization (NEDO)

• Participants： 300 people including representatives from 21 countries, regions, international organizations, etc.*

*Japan, Australia, Austria, Brunei, Canada, China, France, Germany, Italy, the Netherlands, New Zealand, Norway, Poland, Qatar, South Africa, Korea, United Arab Emirates, United Kingdom, United States, European Commission, IEA Participants：

●Ministerial Session●Industry and International Organization Session

PROGRAM

- Plenary Session: Potential of Hydrogen Energy for Energy Transition- Session 1: Expansion of Hydrogen Use - Mobility & H2 Infrastructure -- Session 2: Upstream & Global Supply-chain for Global Hydrogen utilization- Session 3:Renewable Energy Integration & Sectoral Integration

16

We share the view that hydrogen can be a key contributor to the energy transitions underway to clean energy future and an important component of a broad-based, secure, and efficient energy portfolio. Also, we confirmed the value of collaborating on the following four agendas on “Tokyo Statement” to achieve a “Hydrogen Society” .

Harmonization of Regulation, Codes and StandardsInternational Joint R&D emphasizing Safety

Tokyo Statement

Study and Evaluate Hydrogen’s PotentialCommunication, Education and Outreach

*Hydrogen Energy Ministerial Meeting 2019 is scheduled for September 25th in Tokyo.

Hydrogen Energy Ministerial Meeting 2019

●Date: September 25th, 2019●Venue: TOKYO, Japan●Host: Ministry of Economy, Trade and Industry, Japan●Attendees : Ministers, Government officials, Private Company’s CEOs

Agenda(tentative):

AM: Ministerial Session Opening Remarks (Japan: Tokyo Statement, Global Hydrogen Target) Ministerial Discussion (Short Speech by Minister level) Updates from cooperating organization(IPHE, IEA, CEM/MI, HC, G20) Discussion (Other participant’s)

PM: Work Shop with Industry and International Organization session Plenary Mobility WS Hydrogen Supply Chain WS Sector Integration WS

●Objective:

Follow up “Tokyo Statement” to realize it Set “Global Hydrogen Target” to share global goal.

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